tv The Communicators CSPAN October 31, 2011 8:00pm-8:30pm EDT
tough to keep those isolated from politics and it's going to happen. when there is money involved, it is hard to avoid. >> host: thank you for helping us understand better science, research and development. our guest has been albert teich senior policy visor at the american association of advancement of science. thank you. >> tonight on "the communicators" tom tauke verizon's vice president talks about managing traffic on the internet.
>> this week on "the communicators" tom tauke discusses key issues and tell conditions, management traffic and internet the role of the federal communications commission and spectrum sales. >> host: this week on "the communicators" verizon's executive vice president for policy, tom teich is our guest. we are also joined by kim hart, senior technology reporter for politico. they are here to discuss several telecommunications issues confronting verizon and the wireless world. we begin the questioning with kim hart. >> guest: hi mr. talky, thanks for it being here. on thursday the ftc has significant vote on reforming the universal service fund and the compensation system. with a mouthful and even more complicated to follow. i wanted to get your opinion on how you thought it all turned out after so many months of lobbying and years of talking about needing to do this. how do you think it all turned
out? >> guest: almost decades of talking about this and i think first of all the chairman of the commissioners deserves credit for taking on this issue, tackling it and getting it done. it is a big issue and very complex. is in chile we have a system of subsidies under the old telephony world that continued as the old telephony world has died away. the subsidies were in many cases being abused. they weren't targeted in a way that was helpful to consumers so it really became almost an embarrassment for government as well as the industry. so i think the fcc tackling this and addressing it was really important. and from what i can tell and of course we haven't seen the article yet but from what i can tell they also have done a very good job of balancing the various challenges that they have faced in the interest of the various parties to get a package that hangs together
well, is coherent and is trying to accomplish the core object is in the core objectives i think are one, to have a limitation on the subsidies gradually phased out over time in two the deployment of broadband rather than supporting voice services and the deployment of broadband services across the country so i think they are going to get that. and i think third, they have done this in a way which has permitted the industry to be stable. in other words, one of the things that has happened is the rapid change in the subsidy subsidies things would have destabilized companies and resulted in a reduction or elimination of services in some areas so i think they have done that very well. so overall it seems to me they have done a good job here in reducing the subsidies and targeting bad and achieving the objective for which the subsidies should be in place. the. >> guest: a ricin is one of the companies that stands to
gain from the reduction of the access charges as they go down open its two years. you didn't realize a whole lot on universal services funding in the beginning like some of the other companies. verizon in a large way kind of made out pretty well in this whole thing but do you think there are some pitfalls that we may not be looking at is closely enough -- we should be at? >> guest: four-eyes and of course the various parts of the company won and lost so the wireless part of the business at telco lost and will lose money in the wireless part of the business gained a little bit decodes it will pay less for access. and so as a result there is something of a mixed bag but overall it will be good for the industry and certainly good for our company and i think we are supportive of what the fcc has done which is we understand it at this point. of course there are going to be a lot of issues that will arise because this is very complex and
so there will be a few pitfalls along the way. the fcc still has a lot of work to do to try to work through those as it enters into the various phases of this plan. the one thing that is of greatest concern to me that came out in the order was the notice of proposed rulemaking relating to ip interconnection. this is the interconnection in essence of internet services or internet companies and particularly voice-over ip. this is an area where the government hasn't engaged before and it is an area that has had commercial agreements and i think that the thing that causes us concerned about this is that if we look at it in the context of the international arena, we have in europe carriers in europe calling for rules on ip interconnection that would allow them to charge for the delivery
of traffic to their countries, into their countries. to establish a system that was similar to what we had in the old voice world, a system of charges, delivery of traffic to the developed world because they want to collect this money in order to build up their infrastructure. this is something which puts in essence old world regulation into the new world and it allows countries to prevent the free flow of information into those countries, and of course it is really targeted at our internet companies in the u.s.. our u.s. companies provide the content. we provide the search. we have the amazons. we have the netflix's so we are the ones that are sending traffic and they want to charge us in a sense to help them collect money from the u.s. companies. so i think when you look at it
in those contexts we have to be very careful about what what we do domestically in setting up a regime for a government regime for interconnection rather than allow the commercial agreements that have governed us in the past and the in the internet world. >> host: tom tauke what about phasing it out completely. do think that could be achieved? >> guest: i think that is what we will compress over the long-haul. now with the order is focused on, or u.s. is focused on is not ongoing subsidies but it is focused on trying to provide that capital investment if you will were the networks to bring broadband to heart to serve areas. while we are doing a great job i think is an industry and is a country and getting broadband deployed relatively rapidly, both wireline and wireless, there are areas in the country where economic it just doesn't make sense to provide these networks, build these networks and provide the service.
i believe the fcc is of the view and certainly i am that once the of the structure is built and you can provide multiple services over a broadband infrastructure, you probably will not need subsidies or at least very limited subsidies in very few areas to sustain those networks because these networks provide more services than just voice so you will have multiple revenue streams over these networks. and as a result, think that the key is to use a subsidy to build the infrastructure but then you ought to be able to phase out the subsidies once that infrastructure is built and the services are flowing over those networks. >> host: there were some complaints that nontraditional carriers were being shut out with this usf rulemaking and they weren't allowed to favor the large verizon's and at&t. >> guest: actually a would argue just the opposite. under the old system essentially the money was targeted to the old voice carriers, the
traditional wireline telcos and it was designed to subsidize voice so in rural areas the rural carriers got the money and the incumbent carriers got the money. so this i think through the auction system on the wireless side and through the system that is on their way on the wireline side, which will at some point move to an auction system after five to seven years i think we are going to see an opening up her other carriers to be able to receive the subsidies. now i should observe and this is exactly why you asked but one of the abuses we have had if the system has been among wireless carriers. so we have had areas in the country where we have had a dozen, 15 in one instance and i'm told 16 carriers that receive subsidy to provide service to that community. and the subsidy was based on the cost of delivering a wireline
service to the community. so obviously if you strong a wire to a home a mile away it could be fairly expensive. the wireless carrier could come in and get that same subsidy and instead of getting at once to the house get a three, 45 times depending on how many mobile phones are in that family and so it became a boondoggle. why would the government ever want to subsidize 14, 15, 16 carriers or even five or six in a heart to serve area? and of course as a result of this it became an abuse of the system. so i think that in one sense some of that abuse has gone away and will go away on the wireless side as we will have focused on the areas that don't have service and secondly, think what we will see however is all carriers eventually, once it is fully phased in will have the opportunity to bid the serve
areas that don't have service today. >> guest: you once, a few months ago, talked about the sheer number of rural carriers in some states like iowa for example. do you think this will lead to some consolidation of some rural carriers and put them out of business even? >> guest: this has been happening. i mean that consolidation has been happening for quite a while and this is good. when i represented the great state of iowa and congress there were 161 telephone companies in the state of iowa. i can tell you exactly what it is today but that consolidation is gradually taken place and i think this is a positive thing for consumers because when it comes to building infrastructure, there are benefits to having some scale. generally, these carriers have builds already the infrastructure for broadband because they were able to refuse
the essential subsidies coming through for voice services that would -- so they would have received less subsidies, many of them over the next several years, less subsidy than they did before. i don't think this is going to put them out of business because the fact is they have built broadband networks and they can deliver more services over those networks so now they would have not just voice revenue but video revenue and other services that are going to continue titcomb into the arena i think because of the new technology and the new infrastructure that is in place. i think, i think the fcc did a very good job in balancing here again so that they are making sure companies don't have financial shock. they are aborting the financial shock and the new technology and the new services. >> host: chairman genachowski in his press conference following yesterday's meeting talked about the costs and we just want to play a little bit
of this and get your reaction. >> i don't expect that overall consumer rates will go up as a result of this order as compared to not doing reforms. so they reform, what we are doing today is eliminate any subsidies that end up on consumer phone bills. it constrains the growth of the fund and that growth would have translated directly into increases on consumer phone bills. >> host: mr. tauke? >> guest: i think the chairman is right. i don't think we are going to see increases in phone bills as a result of this order. the trend in the industry is down. you are getting more service for the dollar that is spent and that trend is going to continue. there may be a company here where there is a bump up in one part of the bill and a decrease in another part of the bill but overall, this is going to result
in less money being paid by consumers to the industry for the services that are being provided. >> host: kim hart do you have questions on the issue of usf before you move onto another topic? >> guest: i think we have covered it. >> host: tom tauke is the vice president, executive vice president for policy for verizon. we want to move on to net neutrality. what's the status of verizon's suit against the fcc? >> guest: the status is this, that the process has occurred among the various circuit courts to determine which circuit court will hear it and it is the d.c. circuit course that will hear the case. to the best of my knowledge the court has not yet set a calendar for that so we are going to wait and see what the calendar will be set forth by the court. >> host: there was an article recently and politico, one of kim hart's college wrote an article that was serendipitously beneficial to verizon.
>> guest: in this case, the choice was made by lottery and the d.c. circuit was pooled when they did a lottery the lottery among the courts. we believe that if another court had been elected the backcourt would defer to the d.c. circuit because the d.c. circuit generally has handled these issues in the past and handled the most recent case which was the comcast case from which the current order developed. i think in addition to that, that we believe that because of the impact on wireless licenses, that there was another angle for bringing it to the d.c. circuit. the d.c. circuit has the responsibility by statute for all of those cases. >> host: representative -- is the chair of the telecommunications subcommittee recently wrote a letter to chairman genachowski saying, do not move forward on your net neutrality proposal. if for any reason that it does go through, could congress step
in? >> guest: well interestingly, there is a congressional review act process for returning regulations that are adopted by agencies including the fcc. the house's offer reacted and passed the motion to disapprove a regulations. it is now pending action in the senate. this is something that doesn't happen very often. it happens occasionally but it appears as if there are sufficient senators to force a vote in the senate and so we expect that will happen sometime over the next few weeks or months. >> host: kim hart? >> guest: in that lawsuit verizon said the fcc has overstepped its jurisdiction and does not have any authority over broadband and therefore should not be meddling with its networks but the fcc has said that the rules create certainties for business and that is the most important going forward. do you disagree? >> guest: yes, disagree that
it creates certainty but i think it is also the main issue we have is jurisdiction. the jurisdiction or the authority of the -- over the internet space with a broadband space. the fcc is relying on a statute that was built for the telecom world, the old telecom world, the voice services over wireline networks and are trying to find authority there to extend to coverage of the internet and the delivery of services over the internet. we don't believe that the statute gives them that authority. we don't believe they have the jurisdiction therefore to impose these rules and in the order that they adopted, not only did they claim jurisdiction to impose these rules but they claim jurisdiction to essentially regulate the entire internet space, including price regulation, interconnection which we talked about a few minutes earlier, and essentially
a claim that we can introduce the world of telephony regulation into the internet and broadband space. we think that is wrong and they don't have that authority. we also think from a policy perspective that is very dangerous so as a result, we are fighting this in part because of the implications of the claim of jurisdiction more than the actual rules. and now just to be clear, as we have said, we don't have to change our business practices to comply with these rules. we we are full and compliance with these rules and we were before they were adopted so it isn't a matter of really a dispute about open networks. we favor open networks. this is really a dispute about whether the fcc has authority to regulate the internet space. >> host: mr. tauke ctia which represents a lot of the association which represents a lot of the wireless industry has taken a backseat on the net
neutrality and while bryson has filed suit. what are your thoughts about that? >> guest: well, there are two sets of suits against the fcc. one set of suits was filed by players who said the rules that were applied to the wireline side of the business should also have been applied to the wireless industry. and so, the ctia is weighing in to fight that piece. they aren't weighing in on the verizon site to overturn the fcc rules, so the ctia is taking a slightly different position. and in part this is because these rules were a result of a lengthy negotiation with various players in the industry. i was part of a lot of those discussions and some of the companies, in essence, agreed to support the rules if they were shaped the way they were. we never agree to that and so we obviously are challenging it as i said on jurisdictional grounds but other companies reach an
agreement with the fcc and therefore are challenging in some of those members are part of ctia and i think that is why ctia is walking the line of this. >> host: this is c-span's "communicators" program. our guest with verizon tom tauke has served in congress in 1979 to 1991. our guest reporter, senior technology reporter for politico, kim hart. >> guest: i wanted to switch the discussion to spectrum issues which is near and dear to verizon's card as well. we all know the subcommittee is right now try to figure out its recommendations for deficit reduction and the spectrum auctions could be a part of that, those recommendations. how do you think the supercommittee will handle whether to include a spectrum auction or to allow that to go through with a regular congressional process or where do you think it is going? >> guest: i think that the odds are that the supercommittee
if it comes up with recommendations, which i think it will, that if it comes up with recommendations for the congress on deficit reduction that will include a proposal relating to auctions of spectrum. they really are scrambling to find money, let's face it and there aren't many places you can find money for the treasure without raising taxes. so i think they are going to go on this and included in the deficit reduction package that comes forth on that committee. this is a good thing from our perspective, because it is really important that more spectrum be made available. the yankee group did a study which said by 2015 the capacity of wireless networks would have to increase 60 fold from what they are today, 60 times more than today in order to accommodate the demands for additional video services and other kinds of traffic over wireless network. consumers are eating up the
wireless capacity if you will which is a good thing in our perspective by downloading videos and so on. so i think that there is going to be a real need for spectrum. you know, and this is a long process to clear spectrum so if congress gives gets its authorization now, it goes through auctions and then you can get the build the infrastructure using that spectrum so from the time he starts to the time you actually bring benefits to consumers it is an eight to 12 year process. so really important we start now and i think congress will do that. i will say in the committees of jurisdiction, commerce committee and the senate passed legislation already in this area. the house commerce committee has been working on it. the supercommittee has something to work with from the committees of expertise. >> host: hovered law professor yoshi -- argues in "the huffington post" that it is not the right approach for, to make the networks sell some of their
spectrum because it will special in addition he goes on to talk about the use of unlicensed spectrum and how wi-fi has been very successful in short distances. >> guest: i think congress is looking how again to achieve a good balance here and i think, i suspect that there will be some support in the supercommittee for providing some unlicensed spectrum. part of the question is what spectrum is used for license services? what is unlicensed and so on? and they think that the 84 probably megahertz that will come from the broadcast side is probably better suited for the kinds of services that we have today that are maybe for unlicensed services and therefore i think that the committee and we would hope the committee would use that spectrum for mobile services and perhaps potentially some spectrum coming from the
government for mobile services but there will be other spectrum that over time will be -- more spectrum will be made available for unlicensed. >> guest: and speaking of spectrum, wanted to touch on the at&t and t-mobile deal. last month -- was speaking at an investors conference and said the at&t and t-mobile transaction had to occur because of a lack of spectrum on the market and it was almost -- pushing the companies together. so is with that, is verizon supporting the deal? i know you are not seeking a position but it certainly seems like you are not opposing it. >> guest: we are not supporting it. we are not opposing it. we are trying to stay neutral on this. i think -- i know what lowell mcgavin, the point he was making with this. what drove the motivation for the transaction was spectrum and
in essence get highlighted the need for the u.s. government to address the spectrum issue just as we talked about earlier. congress needs to do something in order to make more spectrum available. companies recognized there will be a great need for spectrum, and so it was just another sign that more spectrum is needed and that was the factor that drove the at&t t-mobile transaction. >> guest: the department of justice has to block the deal. if they are successful in that, what kind of indication does that have for the overall industry going forward which does need more spectrum as you said and needs flexibility in order to acquire that spectrum? >> guest: it is unclear exactly what the implications would be at the doj or the fcc turning down the transaction. i think that it is safe to say companies will adapt to the
circumstances that are in place. t-mobile is already taking steps in the marketplace to go after the pre-paid lower cost services and to try to carve out a niche there in anticipation of a potential turn down of the transaction. the companies will adapt to the circumstances. the overall industry i think will highlight the need however for congress to act on the spectrum issue and for the fcc to move promptly on congress to implement the plan. the bottom line is huge demand coming. if you don't increase of spectrum available, the cost of services will inevitably go up and that is not in anybody's interest and frankly not in the company's interest, not in the consumers interest. >> host: kim hart time for one more question. >> guest: i did want to touch on the other lawsuits that verizon over data roaming. can you give us an update on the
status of those? >> guest: this again is in large part a jurisdictional issue. the status is before the corporate we don't again have a clear timeframe for action by the court. the bottom line is that we don't want the fcc to have authority to regulate its wireless space and we are again attempting to comply with the fcc's authority to the statutory jurisdiction that it has. >> host: finally mr. tauke, 15 years ago verizon was basically a local telephone company and today it is bios, wireless and wireline. where are you going to be in 10 years? what is the path? >> guest: the way i would describe it, first we have been a regional and national company and we are becoming a global company. we already have the most connected global that bone,
internet backbone, the premier internet back on. we also have recently engaged in cloud services, computing services. those are two of our efforts to move into the global market. secondly, we have had siloed siloed networks if you will, wireless networks and wireline networks and i.t. networks. we want to have unified platforms to bring to consumers and businesses so that they can converge their services if you will. video, we say anytime, anywhere, anyplace and similar for other data services. i think those are two of the things you can expect from verizon, trying to bring to the consumers and businesses a converge set of communication services. >> host: tom tauke as executive vice president for verizon for policy and kim hart is a senior technology reporter at politico.
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